Growth of India’s service sector eases in April amid COVID crisis

05 May 2021 Evaluate

The growth of India’s service sector eased in the month of April but it remains above the boom-or-bust line of 50 that separates expansion from contraction, with a further solid increase in new work supporting output expansion. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index fell to 54.0 in April from 54.6 in March. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - also eased to 55.4 in April from 56.0 in March.

The report noted that the rise in business activity was constrained by the pandemic and sentiment towards growth prospects faded. Besides, companies reported a sharp rise in expenses in April, which they linked to higher prices for food, freight, fuel and a wide range of other items. The overall rate of input cost inflation was the strongest seen in close to nine-and-a-half years. Also, there was a further decline in overall service sector employment.

According to the report, there was another increase in outstanding business during April, but the overall rate of accumulation was modest and the slowest in the current 11-month sequence of accumulation. Meanwhile, Indian services firms were optimistic regarding the 12-month outlook for business activity, but the overall level of positive sentiment fell to the lowest since last October. The escalation of the pandemic was the main drag on confidence.

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